Sony Adds New Premium-Goods Sales Policy

By Greg Tarr -- TWICE, 5/5/2008

SAN DIEGO — Sony has notified dealers that it will institute a new sales policy for selected premium products, designed to preserve value and help retailers maintain profitability.

The program, called the Sony Unified Resale Execution (SURE) program, will take effect June 1 and is being applied to Alpha cameras, OLED TVs, ES series products, VPL-VW60 and VPL-VW200 1080p front projectors and forthcoming XBR-7 and XBR-8 series LCD TVs.

Only authorized Sony dealers will have access to the products involved.

SURE prices are determined by what market conditions will allow a reseller to maximize profit, Jay Vandenbree, Sony SEL sales president, told TWICE. "It's not all product lines, but the premium ends of the product categories, and it is not just the prices that they advertise, but the prices they actually sell the products for."

"This is something we decided to establish in conjunction with our retail partners to help them be more profitable on our product and to get what we see as the value in the marketplace," Vandenbree said.

"We thought it would be a tremendous opportunity, considering the value to the consumer has never been higher. It's a great opportunity to help our retail partners, because clearly you can see what is happening to retailers that don't or can't."

Vandenbree said retailers are free to do what ever they want, "but our unilateral announcement says, 'Here, this is what our product is worth and what we think you should sell it for, and if you choose not to do that there is a three-step enforcement process that says you will lose those products for 60 days on the first offense, six months on the second or one year on the third.' "

He said the policy will be applied to "every dealer who chooses to assort the products," and will be monitored by Sony and a third party. In addition, retailers will be given forms they can use to report violators.

"Any time we get a form like that, we will have to do our due diligence and research it," he said.

Vandenbree said Sony looked at recent legal rulings covering retail pricing actions in setting the SURE policy, but he added, "Unilateral pricing has been around for a long time. On premium high-end product there is an opportunity to do that. There are other manufacturers and manufacturers outside of our industry that use that process to determine the value of the product and help the retailers."

"Along with our program we will have a regular rotation of purchase-incentive programs," Vandenbree said. "We are not going to just throw the products out there for the next 360 days and see how it works. There is an established promotion calendar that will help retailers be able to go through the process and find opportunities to advertise, too."

Vandenbree added, "We will help them be competitive too, at different times of the year, but it helps the retailer use their value-add as differentiation in the marketplace."

The policy differs from Sony's Suggested Profit Picture Guideline (SPPG) pricing policy that stipulates pricing levels for ads that Sony pays for.